We have investigated whether in the human thymus transition of CD4⁺CD8⁺ double positive (DP) to CD4⁺ or CD8⁺ single positive (SP) cells is sufficient for generation of functional immunocompetent T cells. Using the capacity of thymocytes to expand in vitro in response to PHA and IL-2 as a criterion for functional maturity, we found that functional maturity of both SP and DP thymocytes correlates with downregulation of CD1a. CD1a⁻ cells with a persistent DP phenotype were also found in neonatal cord blood, suggesting that at least a proportion of mature DP cells can emigrate from the thymus. The requirements for generating functional T cells were investigated in a hybrid human/mouse fetal thymic organ culture. MHC class II– positive, but not MHC class II–negative, mouse thymic microenvironments support differentiation of human progenitors into TCRαβ⁺CD4⁺ SP cells, indicating that mouse MHC class II can positively select TCRαβ⁺CD4⁺ SP human cells. Strikingly, these SP are arrested in the CD1a⁺ stage and could not be expanded in vitro with PHA and IL-2. CD1a⁺CD4⁺ SP thymocytes do not represent an end stage population because purified CD1a⁺CD4⁺ SP thymocytes differentiate to expandable CD1a⁻ cells upon cocultivation with human thymic stromal cells. Taken together these data indicate that when CD1a⁺ DP TCRαβ^low cells mature, these cells interact with MHC, but that an additional, apparently species-specific, signal is required for downregulation of CD1a to generate functional mature TCRαβ⁺ cells.